The Pre-Emptive Counter-Offer

My nephew got his dream job, straight out of college. It was exactly the work he’d hoped to do; the job had a good starting salary (at least, based on recent-grad standards), and the company was in a great location (15 minutes away from Mom’s house). Two years later, though, his situation was different. With a few years of experience under his belt and a few accomplishments to list on his resume, my nephew could have begun to look for a better-paying position. You don’t have to be a brilliant manager to recognize that; it’s totally “natural.” But, before the job-hunting idea finished percolating in my nephew’s head, his manager took drastic action, and did something entirely unusual.

“Look,” his manager told my nephew. “We know that you’re now qualified to look for a ‘better’ job. But we love your work, and we don’t want to lose you. We’re giving you a big raise, because we want you to stay.” My nephew certainly appreciated the raise (which my sister, provider of all family gossip, described as “a significant amount”). And it goes without saying that he appreciated the company’s belief in him. He’s still at the same company, another two or three years later.

When a disgrunted (or even mildly gruntled) employee gets another job offer, it’s common for your company to make a counter-offer: we’ll give you 10% more if you stay with us! I’m sure that there are official HR statistics to indicate how often employees accept counter-offers, but I suspect that it’s rare for them to say Yes. There’s emotional baggage, besides. In the company’s view, the employee has already demonstrated “disloyalty” by looking elsewhere; and to the employee, who wants protestations of “we need you!” only after a gun’s been pointed at the boss’s head?

Instead, I’m told, some companies wisely offer a “Talent Review,” giving an unexpected raise based on a set of assumptions: this person’s market value is more than we’re paying her; she’s bound to figure it out sometime; it’d be awful to try to replace her. If the firm offers a “pre-emptive counter offer,” she’ll be grateful for the raise and promotion and recognition… which (points out a cynical realist) means we might be able to offer far less than we would in a “oh no she’s given notice!” frenzy.

How often do you do this, though? How has it worked for you?

1. Often enough — whenever it seems necessary.

2. I’d love to… but I could never get management to spend money unless they have to today.

3. Interesting idea, but I wouldn’t do it. I’m betting that the employee will stay without this extra incentive — or that it’ll give her the idea that she might get even more, elsewhere. Why spend money if I don’t have to?

4. No way.

If you answered #1, how did you convince the Powers-That-Be this would be a good idea? All the people who answer #2 want to know!